For decades, major oil producers have been the highest earners in the natural resources industry, but their once smaller mining peers have been eclipsed by record profits because of the booming metals market.
The windfall for the mining industry is iron ore, copper and other metals. A wave of inflation in the global economy has increased costs from power lines to construction beams.
In the corporate world, the top five iron ore mining companies are expected to make bottom line profits of $65 billion this year, according to Bloomberg estimates. This is about 13% higher than the five largest international oil producers, subverting the hierarchy of decades ago.
"this is crazy," said Mark Hansen (Mark Hansen), chief executive of Concord Resources, a London-based trading firm. "the current value has shifted from energy to metals."
The staggering mining profits are mainly made of iron ore, the world's largest commodity after oil. It is a key ingredient in steelmaking and has always been less than $200 per ton. Australia's largest mining company can mine a tonne of iron ore from the ground for less than A $20 a tonne.
Copper prices also jumped to an all-time high, breaking the $10,000-a-tonne mark for the first time in a decade. A basket of base metals, including aluminum, nickel, copper, tin, lead and zinc, is traded only twice as much as in modern history.
The windfall of the mining industry is more important than the natural resources industry. This suggests that companies across multiple industries will face a trend of rising costs, which could at some point translate into broader inflation and hit bond and foreign exchange markets.
So far, central banks, especially the Federal Reserve, have largely ignored these pressures, saying they are an one-off price rise that is unlikely to cause inflation. The Fed said on April 28th that despite the rise in inflation, the increase largely reflected "temporary factors".